Contracts Suck.

I’ve been writing this post in my mind for a few weeks now. We recently terminated our relationship with a certain vendor, basically because the results were deteriorating steadily for awhile and we just finally decided “enough already” and pulled the plug. We were paying them $500/month since 2000.

A few weeks later I receive a “final invoice” from them, for $2,900, for “Discounted Contractual Obligation”. WTF is this, a joke? I reply. I am assured that they would never send an invoice “in jest”, and after some back and forth they tell me that the invoice was calculated under the terms of our account agreement. So I ask for a copy of the contract, and a few days later, they send me a blank, PDF of a contract what clearly outlines an annual automatic renewal and penalties for early termination. Only problem is, it’s blank. Where is the executed agreement? I’ve never heard back.

It brought back fond memories of a well known managed hosting provider who offered us “top of the line” DDoS mitigation protection for $5,000/month. We did have agreement, I was the one who signed it. The only problem there was, every time we got DDoS-ed, their “solution” would completely implode and they’d end up null-routing us. Nice. So after a series of DOS attacks, of which they didn’t successfully mitigate a single one without null-routing the nameservers we had deployed there (thankfully not all of them), we tell them “this isn’t working for us” – they are sorry it didn’t work out but they’re still holding us to our contract. We ended up going with Prolexic but we still had to pay those other guys for nearly another year.

Nice Work if You Can Get It…

I recently heard back from a company attempting to move their DNS over to us from their current managed infrastructure supplier. She told me that they had given notice to their present provider 1 day late, and that the supplier had invoked the automatic contract renewal. They were now locked in for another year, and the penalties for early termination were more than 10X the total annual costthat we had quoted them. Holy Fsck.

I can understand that there are certain situations that require contracts, where you would be stupid to go into it without one. In many situations where there is a mutual exchange of both responsibilities and value, situations that require long-term commitments or open both sides to potential vulnerabilities (even if only opportunity costs), a contract is a must-have.

But Software-As-A-Service, providing online services or managed infrastructure, etc isn’t one of them. This is the cyber-equivalent of being the coffee-shop your customers buy their bagel at every morning. Do you need to lock them into an auto-renewing 1-year commit in order to sell them breakfast and a cup-o-joe every day? The ostensible reasoning (from the vendors) is that the contract “protects” the customer, by setting out the responsibilities and minimum service levels the vendor must provide to the customer. Bullshit.

The fact is that in a SaaS, IaaS or *aaS environment, you are typically billing the client on a predictable cycle, as long as you keep the client happy, they’ll stay, and as long as the client keeps paying you, you’re happy. There is no need for a contract to lock this up. If you suck, or if you’re charging over-inflated prices, the client should be able to leave, and if the client stiffs you, the vendor can just turn them off. Pretty simple. If there are any rules to be adhered to, you can cover those off in your Acceptable Use Policy (i.e. you spam / we nuke, etc).

When you bring a contract into it, the most likely benefit is to the vendor, that it can “lock in” the customer (often at inflated prices) and protect the vendor from it’s own incompetence.

If you look at the SLA’s of these vendors who lock-up their customers with contracts, they are one-sided and biased. The vendor decides what an “outage” is, the recourse is usually some account credit. So if your company falls into a smoking crater for an hour, and you can get the vendor to agree that they left you over a barrel, they’ll give you a 2 hour credit against your bill. Do you feel made whole?

You can have Service Level Guarantees without requiring the customer to be bound by a contract. We do exactly that. For enterprise clients that means 100% DNS Uptime. And if the DNS flakes out on you, you don’t pay for that month. What constitutes an outage? You telling us “The DNS didn’t work” is an outage. (For annual billing customers it’s a simple 100% Satisfaction Guarantee, any time, any reason, none of that “within 30 days” bullshit. We’re either cutting it or we’re not).

We had a new user testing us out last week and they added a hostname and for some reason it propagated out to all of the nameservers instantly – except one node inside dns1. The straggler picked it up after about 10 minutes but under their environment that’s 9.95 minutes too long and it impacted them operationally. That’s an outage (and we fixed the problem).

When long time customer metafilter.com moved over to the new system, an atypical chain of events ensued and the end result was that we broke mefi. That’s an outage.

These aren’t our proudest moments, but like most people, we’re human. We’re not one of these DNS companies who claims to have never had an outage (since 1998 we’ve had two), nothing ever goes wrong and when something is obviously amiss we don’t say “No it’s not!”. We’re not going to judiciously interpret an SLA in our own favour and tell you “sorry, that one doesn’t count”. And if you’re just plain not satisfied with us we would never stoop to holding you hostage with a contractual obligation to stay with us and be miserable. If we have to hold a gun to your head to make you stay then we’re are a disgrace as a business.

Now would be a good time to resurrect the original mission statement of easyDNS, coined back in 1998, we set out to

Drive a stake through the heart of lock-in in all its forms.

That’s what we’re about. Which means we’ll give you a 100% DNS Uptime Guarantee, but we’ll never force you to sign an onerous, one-sided contract to get it.

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Comments

Love your point of view and your mission statement. We’ve run into these stupid auto-renew contracts with the reminders that come AFTER the renewal date in completely IT UNrelated businesses. It’s everywhere.